A SOLICITOR v. LAW SOCIETY OF HONG KONG

IN THE COURT OF APPEAL

1995, No. 40
(Civil)

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J U D G M E N T

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Mayo, J.A.:

1. The appellant is appealing against the order of a Disciplinary Tribunal of the Law Society.

2. Originally 7 charges were laid against the appellant. They arose out of a complaint made by a client Madam Fan Wai Kwan.

3. Madam Fan instructed the appellant's firm to represent her in May 1992 on her proposed purchase of a flat being Flat H on the 37th floor of Block 4 Greenfield Garden, Tsing Yi, New Territories. She was introduced to the appellant by an Estate Agent trading as Wealth Property Agency Company.

4. The appellant's firm received the title deeds from the proposed vendor's solicitors. After perusing the deeds the appellant raised various requisitions on title. When it became apparent that the vendor's solicitors were either unwilling or unable to reply to the requisition to the satisfaction of the appellant, the appellant advised Madam Fan to either discontinue the proposed purchase or instruct some other firm of solicitors to represent her. Madam Fan chose the latter alternative. The appellant rendered her a debit note in respect of charges and disbursements which had been incurred in respect of the proposed purchase.

5. The main gravamen of the complaints made against the appellant was that the provisional Sale and Purchase Agreement on Wealth Property Agency's printed form contained a provision to the effect that if a proposed purchaser engaged the services of the appellant's firm they would receive a dispensation in respect of costs payable on the purchase of the property.

6. It was not quite as simple as that. There was also a provision that a commission would be paid to Wealth Property Agency. The overall effect of this was the appellant's charges would be defrayed by Wealth Property Agency by virtue of an agreement between the Proprietor of that firm and the appellant. By this arrangement there was a direct financial incentive for a client of Wealth Property Agency to instruct the appellant and it also raised the spectre of the conveyancing being undertaken otherwise than in accordance with the solicitors' scale fees.

7. The Law Society initiated action on Madam Fan's complaint. Amongst other action the Law Society invited the appellant to comment on the subject matter of the complaint.

8. She availed herself of this opportunity to present her side of the case. In effect she denied knowledge of Wealth Property Agency's printed form and dealt with the other complaints which had been made.

9. The Disciplinary Tribunal were however satisfied that a prima facie case had been made out against the appellant and set in motion the disciplinary process.

10. The 7 charges referred to earlier were formulated. The Tribunal also sought discovery of other papers from the appellant and this was resisted. Eventually the Tribunal ordered that a more limited discovery be made.

11. Subsequent to this the appellant requested that charge 6 should be amended and this was done.

12. The amended charge was in this form:

"In breach of Rule 3 of the Solicitors' Practice Rules the respondent (i.e. the appellant) allowed herself to be held out as being prepared to undertake professional work at less than the scale costs fixed by the Solicitors (General) Costs Rules."

13. It is important to add that it was accepted in the agreed facts that the Law Society did not assert that the appellant had received any kick back or that any client had been disadvantaged as a consequence of the said breach.

14. The other charges which had been preferred were withdrawn.

15. Powerful mitigation was put before the Tribunal.

16. Reference was made to the appellant's exemplary conduct up to the date of the breach of the Rules and the fact that she had given most generously of her time and efforts in voluntary and community affairs. She was given credit for this by the Tribunal.

17. However in determining the appropriate sanction to be imposed the Tribunal did also take cognisance of the appellant's conduct in the enquiry itself. More particularly it referred to the letter the appellant had written when she had been invited to comment upon the complaint which had been made against her. The Tribunal had found that her explanation had not been "full, frank and substantive response to the letters of inquiry from the Law Society".

18. The Tribunal made an order

(1) That she be censured.

(2) That she be fined $150,000.00.

(3) That a condition be imposed upon her     Practising Certificate restricting her from     practising as a partner or sole practitioner     for a period of 2 years.

(4) Costs.

19. It is against the orders referred to the 2nd and 3rd paragraphs that she appeals.

20. The appellant sought leave to introduce further ground of appeal. This was the main ground relied upon. We granted leave to amend the notice to include this.

21. In this ground reference was made to the Legal Practitioners (Amendment) (No. 2) Ordinance 1992 which amended section 10 of Chapter 159 which contains the powers of a Solicitors Disciplinary Tribunal.

22. It is evident from the amending legislation that the maximum penalty which could be imposed by the Tribunal was increased from $50,000 to $500,000 and a new power was introduced enabling the tribunal to impose conditions on the issue of practising certificates to solicitors. Prior to this amendment no such power was referred to in section 10.

23. The Legal Practitioners (Amendment) (No. 2) Ordinance of 1992 came into force on the 30 April 1993 some nine months after the commission of the breach of the rules complained of. There was no provision in the amending legislation to give it retrospective effect.

24. Mr Dykes for the appellant submitted that at the very least there must be doubt as to whether the tribunal had power to impose a fine which was greater than the maximum which could have been imposed at the time of the commission of the breaches complained of or impose conditions such as those contemplated in the amended s10(2)(ba). Mr McCoy for the respondent accepted that both the fine and the restriction on practice constituted penalties.

25. There is a most helpful analysis by Sir Thomas Bingham MR at 272 of L'Office Cherifien v. Yamashita Ltd. [1993] 3 WLR 266 on the applicability of the presumption against retrospectivity:

"The presumption against retrospectivity

The rule that a person should not be held liable or punished for conduct not criminal when committed is fundamental and of long standing. It is reflected in the maximum nullum crimen nulla poena sine lege. It is protected by Article 7 of the European Convention of Human Rights.

The rule also applies, but with less force, outside the criminal sphere. It is again expressed in maxims, lex prospicit non respicit and omnis nova constitutio futuris temporibus formam imponere debet non praeteritis. The French Civil Code provides that La loi ne dispose que pour l'avenir, elle n'a point d'effet retroactif.

The leading English textbooks are agreed that the rule has a place in English law. Bennion, 2nd ed. (1992), Statutory lnterpretation, p. 214, states: 'Unless the contrary intention appears, an enactment is presumed not to be intended to have a retrospective operation.' Maxwell on Interpretation of Statutes, 12th ed. (1969), at p. 215, states the principle in a way described by Scarman J. in Carson v. Carson and Stoyek [1964] 1 W.L.R. 511, 516, as 'so frequently quoted with approval that it now itself enjoys almost judicial authority:'

'Upon the presumption that the legislature does not intend what is unjust rests the leaning against giving certain statutes a retrospective operation. They are construed as operating only in cases or on facts which come into existence after the statutes were passed unless a retrospective effect is clearly intended. It is a fundamental rule of English law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication.'

Craies on Statute Law, 7th ed. (1971), at p. 387, describes as retrospective a statute:

'which takes away or impairs any vested right acquired under existing laws, or creates a new obligation, or imposes a new duty, or attaches a new disability in respect to transactions or considerations already past.'

This text cites Lindley L.J. in Lauri v. Renad [1892] 3 Ch. 402, 421:

'It is a fundamental rule of English law that no statute shall be construed so as to have a retrospective operation unless its language is such as plainly to require such a construction; and the same rule involves another and subordinate rule to the effect that a statute is not to be construed so as to have a greater retrospective operation than its language renders necessary.'

It seems clear that these statements represent the modern law. In Yew Bon Tew v. Kenderaan Bas Mara [1983] 1 A.C. 553, 558, the Judicial Committee of the Privy Council stated the rule in language almost identical to that used by Craies. In Arnold v. Central Electricity Generating Board [1988] A.C. 228, 275, Lord Bridge of Harwich restated the principle laid down by Lindley L.J. in Lauri v. Renad [1892] 3 Ch. 402 421.

In In re Athlumney; Ex parte Wilson [1898] 2 Q.B. 547, 551-552, Wright J. said:

'Perhaps no rule of construction is more firmly established than this-that a retrospective operation is not to be given to a statute so as to impair an existing right or obligation, otherwise than as regards matter of procedure, unless that effect cannot be avoided without doing violence to the language of the enactment.' (Emphasis added.)

This procedural exception is well-established. In Wright v. Hale (1860) 30 L.J. Exch. 40, 42, Pollock C.B. said.

'I have always understood that there is a considerable difference between laws which affect the vested rights and interests of parties, and those laws which merely affect the proceedings of courts; as, for instance, declaring what shall be deemed good service, what shall be the criterion of the right to costs, how much costs shall be asked, the manner in which witnesses shall be paid, or what witnesses the party shall be entitled to, and so on ... I do not think that a matter of that sort can be called a right ... in any sense in which Lord Coke in his Institutes ... has spoken of rights.'

In Gardner v. Lucas (1878) 3 App.Cas. 582, 603, Lord Blackburn said:

'Alterations in the form of procedure are always retrospective, unless there is some good reason or other why they should not be.'

The reason for the exception may be, as suggested by Bennion (see Statutory Interpretation, 2nd ed., at p. 218):

'a procedural change is expected to improve matters for everyone concerned (or at least to improve matters for some, without inflicting detriment on anyone else who uses ordinary care, vigilance and promptness).'

Or it may be that suggested by Mellish L.J. in Republic of Costa Rica v. Erlanger (1876) 3 Ch.D. 62, 69:

'No suitor has any vested interest in the course of procedure, nor any right to complain, if during the litigation the procedure is changed, provided, of course, that no injustice is done.'

But both these passages draw attention to an important point, that the exception only applies where application of it would not cause unfairness or injustice. This is consistent with the general rule or presumption which is itself based on considerations of fairness and justice, as shown by the passage in Maxwell quoted, ante, p. 273B-C, and recently emphasised by Staughton L.J. in Secretary of State for Social Security v. Tunnicliffe [1991] 2 All E.R. 712, 724:

'In my judgment the true principle is that Parliament is presumed not to have intended to alter the law applicable to past events and transactions in a manner which is unfair to those concerned in them, unless a contrary intention appears. It is not simply a question of classifying an enactment as retrospective or not retrospective. Rather it may well be a matter of degree-the greater the unfairness, the more it is to be expected that Parliament will make it clear if that is intended.'

The distinction between rights and procedure, and unfairness and fairness, may well overlap. Thus if a limitation period is shortened but a plaintiff has time to sue before expiry of the shortened period, he is likely to be statute-barred if he does not sue within the shortened period (see The Ydun [18991 P. 236); but if a limitation period is extended after a previous, shorter limitation period has already expired, the plaintiff will be unable to take advantage of the new period because an absolute defence has by then accrued to the defendant and it would not be fair to deprive him of it: see Yew Bon Tew v. Kenderaan Bas Mara [1983] 1 A.C. 553 and Maxwell v. Murphy (1957) 96 C.L.R. 261."

26. If the principles referred to in that case were to be applied to the present appeal it was clear that the Tribunal should not have imposed the penalties which are the subject matter of the appeal.

27. Mr McCoy's answer to this was that so far as the restrictions were concerned it was clear from s10(2) prior to its amendment that the Tribunal did have power to impose such restrictions.

28. The introductory words of the subsection read:

"(2) Subject to the provisions of this Ordinance, on completion of its inquiry and investigation, a Solicitors Disciplinary Tribunal shall have power to make such order as it thinks fit and any such order may, in particular, include provision for all or any of the following matters -"

29. He argued that the sanctions referred to were not exclusive and if the Tribunal did see fit to impose conditions such as those imposed in the present case they were clearly entitled to do so.

30. Mr McCoy drew our attention to Re A Solicitor (unreported) being CA 51/92 where a similar condition had been imposed. The conduct complained of in that case had occurred prior to the amendment of the Ordinance in 1992.

31. It is however evident from a perusal of Cons V-P's judgment that the court had not been addressed on the subject of the Tribunal's power to order that the restriction be imposed.

32. Be that as it may the fact that the amendment was introduced as permitting conditions to be imposed on practising certificates must raise a doubt as to the power of a disciplinary committee to impose such a sanction prior to the amendment coming into effect.

33. So far as the fine was concerned Mr McCoy placed reliance upon the introductory words of s10(2) which I have earlier cited. He submitted that the operative date which was applicable was the date when the penalty had been imposed namely after the amendment came into effect.

34. I do not see any merit in this submission. It is contrary to the principles referred to by Sir Thomas Bingham MR in L'Office Cherifien v. Yamashita Ltd.

35. We are satisfied that Mr Dykes is correct in his submission that the presumption against retrospectivity arises in respect of both the fine and the restrictions and that the Tribunal erred in making the order it did.

36. The original grounds of appeal put forward reasons why the penalties were excessive in the circumstances of the case. However at our request Mr Dykes informed us that if he was successful on the main ground of appeal his client would not pursue these grounds further. The consequence of this is that the fine of $150,000 is revoked and a fine of $50,000 will be substituted for it. The restriction imposed on practising certificates will also be revoked.

37. At the commencement of the hearing our attention was drawn to inconsistencies in the provisions contained in Order 106 of the Rules of the Supreme Court and those contained in the Legal Practitioners Ordinance. The Supreme Court Rules Committee may wish to consider bringing the order into conformity with the substantive legislation.

38. We will hear the parties on costs.

Liu, J.A.:

39. It is good sense and fair policy "that no one should suffer detriment by the application of a doubtful law": Bennion, Statutory Interpretation, 2nd edn, p.215.

40. It appears to be unclear whether s.10(2), as it then stood, would empower the Tribunal to make an order in terms of the present paragraph (ba) and whether paragraph (ba) and the maximum fine in paragraph (c) would enjoy retrospective effect. The ambit of disciplinary power should be clearly defined. At least for this reason, the appellant should not suffer.

41. I, too, would allow the appeal to the extent as proposed by my Lord, Mayo JA.

Godfrey, J.A. :

42. I agree that this appeal must be allowed and I also agree with the order proposed.

43. Section 10(2) of the Legal Practitioners Ordinance, Cap.159 now provides (so far as material) as follows :

"(2) Subject to the provisions of this Ordinance, on completion of its inquiry and investigation, a Solicitors Disciplinary Tribunal shall have power to make such order as it thinks fit and any such order may, in particular, include provision for all or any of the following matters-

......

(ba) permitting the solicitor to continue practice, but subject to conditions which may be imposed for up to 3 years;

.....

(c) payment by that solicitor of a penalty not exceeding $500,000 which shall be paid into the general revenue;

..............."

But this has not always been so.

44. We have to consider whether the Solicitors Disciplinary Tribunal can properly impose upon a solicitor a penalty in relation to a transgression by the solicitor which occurred before any power to inflict that penalty was conferred upon the Solicitors Disciplinary Tribunal.

45. In the case of (ba) to which I have referred above, under which there is conferred on the Solicitors Disciplinary Tribunal a power to permit the solicitor to continue in practice but subject to conditions which may be imposed for up to 3 years, that power was added to s.10(2) after commission of the transgressions of which the solicitor in the present case was accused. That is really the end of the matter. But Mr McCoy, for the Law Society, has urged on us that the introductory words of s.10(2), which confer upon the Solicitors Disciplinary Tribunal a "power to make such order as it thinks fit" are, nonetheless, wide enough to allow the Solicitors Disciplinary Tribunal to make the order which it made in this case. Even before this power was expressly conferred upon the Solicitors Disciplinary Tribunal, he told us, similar orders were made. And he demonstrated that this court has from time to time entertained appeals from solicitors in which the point as to the existence of such a power had not been taken on behalf of the solicitor, and so this court had dealt with the case as if the power in question existed even before the amendment to s.10(2) to which I have referred was made.

46. As it seems to me, it is at best doubtful whether, before this amendment was made, there was in fact the power to circumscribe the solicitor's freedom to practise which the amendment now confers upon the Solicitors Disciplinary Tribunal. I do not say that there was no such power, but I do say that it is doubtful. The amendment, then, exposes a solicitor to a penalty which cannot for certain be said to be one to which he or she was exposed before the date of the amendment. It offends my sense of fairness that that should happen to a solicitor whose transgressions antedated the amendment.

47. I am not satisfied that the amendments to s.10(2) were intended to have retrospective effect, and I am not prepared to speculate that they might have been so intended. If they did not have retrospective effect, it follows that the penalty imposed on the solicitor here under (ba) cannot stand and the penalty imposed under (c) must be limited to a penalty not exceeding $50,000, the maximum sum prescribed by the Ordinance before the relevant amendment was made.

48. When an ordinance says that a disciplinary tribunal "shall have power to make such order as it thinks fit" and then goes on to confer a power to make provision for a number of specified matters, that section must in my judgment be construed as limiting the general words in so far as any of the specified matters involve the imposition of penalties. Otherwise, the tribunal would be able to impose penalties of any character and without regard to the limits plainly intended to operate by way of restriction of its disciplinary powers. It is for consideration, however, whether it would be better, so as to put the matter beyond doubt, to recast s.10 to conform more closely with the provisions, for example, of s.21 of the Medical Registration Ordinance, Cap.161, under which the disciplinary powers conferred upon the Medical Council are exhaustively specified, and the only "power to make such order as the Council thinks fit" is a power to make an order with regard to the payment of costs.

49. For the reasons I have attempted to state, I agree, as I have said, that this appeal must be allowed. There is nothing further that I wish to add.